Vengeance Trading Leading To Blowing Up.

[JesseJamesFinn]

How would you describe Vengeance Trading and is this a mistake even a seasoned Trader makes? I know guys who made horrid trades on Enron, Worldcom, Lucent and Tyco when all those stocks were “In-Play” because of the financial accounting scandals and bankruptcy rumors spread, these stocks moved $3 to $7 points intraday. My long lost friend Willy, he would take all the gains he made from other logical trading stocks in 2000-2001 (SWY, Albertsons, Kroger, COST, HNZ, Pacific Care and many great Defense Stocks) and chase Enron, Tyco, Worldcom and Lucent thinking these would make him whole again. I watched him trade Enron day after day, using all the gains he made in other stocks to throw at Enron. Willy was hoping to make it big again, once the stock his brother worked at, was exonerated. Their entire family lost their retirement savings on that POS Enron and even the middle guys like his brother, they had no idea how badly the stock stunk. Why did he believe his brother’s words over the Chart? He had to admit the Chart said "Sell" but he still bought to stock and held it until liquidation promissing to pony up more money if Etrade's Margin let him hold it after exceeding intra-day buying power for days.




Was Enron his Moby Dick? Daily he lost money on the same stocks in 2000 to late 2002. We made money with stocks that made sense, Willy took the cash and played TY, WCOM, LU, Enron and lost almost every time. The final day we traded was the day he put out thirty trades on Enron after making good money on non-manic stocks. Willy buys Enron, it falls, he short's it and it goes up, buy's it and it falls and finally after this same string of 30 trades he buys a massive block telling me on Yahoo IM, It's this or I am out! Willy’s final trade was close to 200,000 shares of Enron at $3.6-$3.65 He said "It's this or nothing Jess" while my heart sank, "why are you doing this?" Not long after Willy bought the Enron, we got a NYSE Trade Halt. Etrade's Margin liquidated his stock below $1.00. This was the second Trade Halt of Capital losses Willy had been slammed with. He bought at $6.8 and sold it at $4.8 with a prior trade-halt. Why did he decide to lose $500,000 plus another $300,000 in margin loans? How can a newbie learn from Willy's mind?



Why was Willy like "Captain Ahab" and Enron his "Moby Dick"? What was going through his head to say "It's this or nothing" when he still had over $100,000 in trading capital? I know there are some extreme Traders on Elite Trader, Traders that took less than $100,000 and turned it in to Millions of dollars! Was he Vengeance Trading or just plain stupid and why did he feel so hopeless? Thank's for your ideas, I miss the knucklehead because it's lonely trading by yourself!

 

[xelite777]

Quote from JesseJamesFinn:

How would you describe Vengeance Trading and is this a mistake even a seasoned Trader makes? I know guys who made horrid trades on Enron, Worldcom, Lucent and Tyco when all those stocks were “In-Play” because of the financial accounting scandals and bankruptcy rumors spread, these stocks moved $3 to $7 points intraday. My long lost friend Willy, he would take all the gains he made from other logical trading stocks in 2000-2001 (SWY, Albertsons, Kroger, COST, HNZ, Pacific Care and many great Defense Stocks) and chase Enron, Tyco, Worldcom and Lucent thinking these would make him whole again. I watched him trade Enron day after day, using all the gains he made in other stocks to throw at Enron. Willy was hoping to make it big again, once the stock his brother worked at, was exonerated. Their entire family lost their retirement savings on that POS Enron and even the middle guys like his brother, they had no idea how badly the stock stunk. Why did he believe his brother’s words over the Chart? He had to admit the Chart said "Sell" but he still bought to stock and held it until liquidation promissing to pony up more money if Etrade's Margin let him hold it after exceeding intra-day buying power for days.




Was Enron his Moby Dick? Daily he lost money on the same stocks in 2000 to late 2002. We made money with stocks that made sense, Willy took the cash and played TY, WCOM, LU, Enron and lost almost every time. The final day we traded was the day he put out thirty trades on Enron after making good money on non-manic stocks. Willy buys Enron, it falls, he short's it and it goes up, buy's it and it falls and finally after this same string of 30 trades he buys a massive block telling me on Yahoo IM, It's this or I am out! Willy’s final trade was close to 200,000 shares of Enron at $3.6-$3.65 He said "It's this or nothing Jess" while my heart sank, "why are you doing this?" Not long after Willy bought the Enron, we got a NYSE Trade Halt. Etrade's Margin liquidated his stock below $1.00. This was the second Trade Halt of Capital losses Willy had been slammed with. He bought at $6.8 and sold it at $4.8 with a prior trade-halt. Why did he decide to lose $500,000 plus another $300,000 in margin loans? How can a newbie learn from Willy's mind?



Why was Willy like "Captain Ahab" and Enron his "Moby Dick"? What was going through his head to say "It's this or nothing" when he still had over $100,000 in trading capital? I know there are some extreme Traders on Elite Trader, Traders that took less than $100,000 and turned it in to Millions of dollars! Was he Vengeance Trading or just plain stupid and why did he feel so hopeless? Thank's for your ideas, I miss the knucklehead because it's lonely trading by yourself!

People behave that way not because they want to make money, but because they don't want to admit they were wrong, so they keep adding to a losing position until they are dead broke.

Unfortunately, profitable trading has nothing with being right or wrong, it is all about probabilities and playing the odds, much like a professional Black Jack player counting cards at the casino.

 

[xelite777]

"profitable trading has nothing TO DO...", sorry

 

[JesseJamesFinn]

I agree, I saw guys add more money to penny stocks that continued to fall and another guy keep Shorting IMCL because he believed their cancer treatment was bogus, a great conspiracy he could not get out of his head. I think he started shorting IMCL when it hit $7 and kept shorting all the way above $30 only to blow up and return to driving a truck for his Dad, why do guys do this? I get sick when my trade is not acting nice from the beginning, most winning trades usually behave decent enough, not turning against your initial premise violently. I watch my other friend keep Shorting Imclone for no logical reason, he was no biotech analyst nor did he have any education dealing with their cancer treatments and anti-nausea medication.



I thought this thread might help some guys who might decide to chase a stock that's treating them bad. The Yahoo Message Board had guys buying UNXL and Tesla after buying near the high ($38 UNXL and $190 TSLA) emailing me saying "It's just a paper-loss, it's not a loss till you sell it.". There is no way to help people who are dealing or battling this cycle of a Trader's evolution is there?

 

[nkhoi]

Quote from JesseJamesFinn:

...
...! Was he Vengeance Trading or just plain stupid and why did he feel so hopeless? Thank's for your ideas, I miss the knucklehead because it's lonely trading by yourself!

no, he just followed Pink's advice .

Where there is desire
There is gonna be a flame
Where there is a flame
Someone's bound to get burned
But just because it burns
Doesn't mean you're gonna die

You gotta get up and try, try, try
You gotta get up and try, try, try
You gotta get up and try, try, try

 

[ctheo1]

i'd say these people had major character flaws. trading will ALWAYS magnify your emotional/character weaknesses. people believe trading is about method/information etc. this may be true to an extent BUT only probably 20% of the whole puzzle.

i say even if God himself was telling you what to buy and what to sell, you'd still screw up if your psychological make-up was flawed. this is not an opinion btw. this is a fact. i've had close friends and family members who've taken 7-figure sums down to 0 because of that. most refuse to address these flaws. sadly, such is life.

 

[murray t turtle]

Quote from ctheo1:

i'd say these people had major character flaws. trading will ALWAYS magnify your emotional/character weaknesses. people believe trading is about method/information etc. this may be true to an extent BUT only probably 20% of the whole puzzle.

i say even if God himself was telling you what to buy and what to sell, you'd still screw up if your psychological make-up was flawed. this is not an opinion btw. this is a fact. i've had close friends and family members who've taken 7-figure sums down to 0 because of that. most refuse to address these flaws. sadly, such is life.

=============
Great points,C-theo;
trending stocks, trending silver,gold, maybe is 20% of it.

80% of it is work //////// labor;King Solomon said ''in all labor there is profit'' If you do not believe that, ask Don Bright Trading.

Some smart alec usually says ''Don Bright does not work hard, anymore '' That , my friend is party wrong. Some with silver hair , in the sliver state[low tax, state]] who worked hard as a market maker get can get by with things you cant,LOL.....

I know someone wrote a book on trading just a few hours[lazy] a day;
but that was in the days of fractions,LOL.

 

[Handle123]

Quote from JesseJamesFinn:


Why was Willy like "Captain Ahab" and Enron his "Moby Dick"? What was going through his head to say "It's this or nothing" when he still had over $100,000 in trading capital? I know there are some extreme Traders on Elite Trader, Traders that took less than $100,000 and turned it in to Millions of dollars! Was he Vengeance Trading or just plain stupid and why did he feel so hopeless? Thank's for your ideas, I miss the knucklehead because it's lonely trading by yourself!

Just speaking of myself. I usually didn't learn till I lost a few to several times. I did learn the smarter you think you are, most likely will take several times of losing. Every possible way to lose money, I have mastered at one time or another. Not till I lost healthy parts of my account did I make rules so I wouldn't do all the dumb crap I use to do. I can attribute that 95% of my stupidity was in my laziness to backtest more than couple weeks doing so by hand as I opposed to learn how to program. I was spending more time planning my vacations than I was building my trading plan. Of course when young I was greedy, this leads to high ego and a need to being right. What one doesn't know about Math and probabilities, you can crank out 25 winning trades in a row, but you can also crank out 25 losing trades in a row too and they hurt worse and cause of high ego I would start changing to fit current time period. I would start lying to myself that markets rotated around my beliefs, when it was just being in a groove.

I don't think it was Vengeance trading as it was too few eggs in the basket and not enough "what if" rules in trading plan. Every conceivable idea you can dream up as far as what a chart has, one needs an answer, even if the answer is to do nothing. WHAT IF internet goes down, WHAT IF power goes down, WHAT IF cell goes down, WHAT IF you can't get through brokerage, WHAT IF you hear on TV that all the exchanges going to close down, WHAT IF price opened beyond your mental stop, WHAT IF you just got into a long term trade and it blasted straight up, WHAT IF holidays are near by, WHAT IF we near end of the month and want to go short, WHAT IF is a very important part of a trading plan. And the more answers to "WHAT IF", the better trader one becomes. And these are examples of parts of my trading plan.

 

[JesseJamesFinn]

Ctheo, murray and Handle, I think this is why you are still in the game. You crushed out that part of the brain that desires some big capital losses. Great posts guys, I appreciate you helping me figure out what William was thinking. He never did any research and used my Esignal Stock Scanner stocks I was trading before he decided he was going to make all his money back trading Enron. He was not happy making $200-$500 a day on stocks $10.00 and below and wanted to make the big killing!



Are there people you avoid in life who know what you do for a living? I get phone calls during the Trading day from people who know better than to call, only my old mother was allowed to get me to listen to her, not even my wife got that level of attention because she knew it's better to be a secretary to a trader than working a forty hour week job.


A problem I am having is I am getting emails and phone calls from people asking me why their stocks are cratering when I don't follow their stocks. I think it's because I buy Briefing.com, Theflyonthewall, Zacks, all the news agencies from my platform. What would you tell these guys who are so cheap, even if you helped them make money they are so tight, you would not even get them to buy you a beer!


Happy Thanksgiving Everyone! Great input on this thread, thank you and bless your hearts and I hope you have a great December and 2014 Trading year, I enjoy your wisdom, peace be with you!

 

[wrbtrader]

Quote from JesseJamesFinn:

How would you describe Vengeance Trading and is this a mistake even a seasoned Trader makes?...

In my opinion, a vengeance trade is a trade taken that did not occur via a trade signal nor did it occur within the trading plan. Instead, its a trade taken via emotions and the trade has violated one's trading plan. These same traders will also have the tendency to violate their trade management rules, after entry, when they had a strong emotional attachment to a trade that seems to become stronger as the trade continues going against them.

Yeah, season traders do it too.

The real problematic traders are the one's that do vengeance trading and continue with the losses, they eventually blame something wrong with the markets or point the finger at other aspects of trading instead of looking in the mirror.

Maybe worst, if they get "lucky" and close out a profitable trade that had been initiated as a vengeance trade...it will encourage them to do it again whenever they're unable to manage their emotions.

P.S. Don't talk about the markets, don't talk about stocks, don't talk about trading with your friends. From this day going forward, those that refuse to stop calling...refuse to discuss such with them after every phone call. They'll eventually stop calling and asking for advice. Only do such if it really is a problem for you.

Don't talk trading with those not in the business as professional traders nor talk trading with hobbyist nor talk trading with those you know have already lost a big chunk of cash in the markets.

Those that refuse to listen (they keep calling or emailing), always maintain a list resources including financial planners you refer them. Hand out business cards of those resources if needed to those friends that are persistent in person.